Adani Wilmar shares tumble 8% after Adani’s exit

Shares of fast moving consumer goods maker Adani Wilmar tumbled as much as 8% in intraday trade on Tuesday, a day after the Adani Group said it will sell its entire 44% stake in the edible oil maker.

As part of the stake sale, Singapore-based Wilmar International will buy 31.06% stake owned by the Adani Group in Adani Wilmar, an equal joint venture between the Gautam Adani-led conglomerate and Wilmar.

Reacting to the development, shares of Adani Wilmar hit a low of ₹303.30 on the BSE, taking the market cap of Fortune edible oil producer to under ₹40,000 crore.

Adani and Wilmar each currently own 571,019,435 equity shares of Adani Wilmar (each representing 43.94% of the existing paid-up equity share capital), aggregating to 87.87% of the equity shares. The balance of 12.13% equity shares in AWL is held by public shareholders. Under the regulations issued by the Securities and Exchange Board of India, Adani Wilmar is required to maintain a minimum public shareholding of 25%.

Adani Enterprises was reportedly looking to sell its entire shareholding in the edible oil major for over a year. The move is being seen as part of the ports-to-power conglomerate’s strategy to focus on core projects, which include power generation, ports, and green energy initiatives, as well as to prepay debts.

Wilmar International, founded in 1991 and headquartered in Singapore, is among Asia’s leading agri-business group. It is ranked amongst the largest listed companies by market capitalisation on the Singapore Exchange. Adani Wilmar is India’s largest and leading edible oils and food FMCG company, with operations comprising 24 factories in 15 cities and a strong distribution network of more than 10,000 distributors and 0.72 million retail outlets across India. With 100% urban coverage and a presence in over 30,600 rural towns, Adani Wilmar exports to over 30 countries globally.

The company sells edible oil, rice, wheat flour, sugar, packaged food and other cooking essentials under the Fortune brand. It made its debut on the stock exchanges in February 2022 after raising ₹3,600 crore through an initial public offering (IPO).

Wilmar International says the Group will recognise a gain on deemed disposal of an associated company of around $1.48 billion and a goodwill on consolidation which results in a reduction in net tangible assets of approximately $1.12 billion (based on the unaudited financial statements of AWL as at 30 September 2024). AWL will become a subsidiary of Wilmar and will be funded from internal sources as well as bank borrowings. "Wilmar will explore opportunities to bring in strategic investors to participate in AWL's growth story," Wilmar said in a press release.

Adani Wilmar also exports products such as rice, castor oil and oleo chemicals to over 30 countries. These are important commodities in Wilmar’s global trades. A strong presence in India will allow Wilmar to source better and have better trade flows into Wilmar’s global network, the statement says.